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Why SPXU Is Poised to Keep Plunging

By Brian D. Pacampara, CFA - Apr 12, 2013 at 4:58PM

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Market-lagging returns could be written in this 1-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the ProShares UltraPro Short S&P500 (SPXU -5.08%) have received the dreaded one-star ranking.

With that in mind, let's take a closer look at SPXU, and see what CAPS investors are saying about the ETF right now.

SPXU facts

  

Inception

June 2009

Total Net Assets

$580.7 million

Investment Approach

Seeks daily investment results that correspond to three times the inverse (-3x) of the daily performance of the S&P 500. The index is a float-adjusted, market capitalization-weighted index of 500 U.S. operating companies and real estate investment trusts selected through a process that factors criteria such as liquidity, price, market capitalization, and financial viability.

Expense Ratio

0.93%

Year-to-Date / 1-Year / 3-Year Return

(30.5%) / (46.5%) / (42.9%)

Alternatives

ProShares Short S&P500 

ProShares UltraShort QQQ 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 51% of the 459 members who have rated SPXU believe the ETF will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star TerryHogan, succinctly summed up the SPXU bear case for our community:

If there is anything other than a dramatic S&P plunge, this baby is basically mathematically guaranteed to underperform. Even with a long side-ways trend, expenses and volatility degradation will kill this sucker. This is just a short-term hold for people (read: suckers) that think they can time the market.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

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Stocks Mentioned

ProShares Trust - ProShares UltraPro Short S&P500 Stock Quote
ProShares Trust - ProShares UltraPro Short S&P500
SPXU
$16.39 (-5.08%) $0.88

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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